FOREIGN INVESTMENT IN VIDEO MONITORING CENTERS IN VIET NAM

I. Legal Grounds

• Vietnam’s Schedule of Specific Commitments on Trade in Services under the WTO (GATS);

• Law on Investment No. 143/2025/QH15;

• Law on Enterprises No. 59/2020/QH14 dated 17 June 2020;

• Decision No. 36/2025/QD-TTg dated 29 September 2025 promulgating the Vietnam Standard Industrial Classification;

• Commercial Law No. 36/2005/QH11 dated 14 June 2005, as amended and supplemented;

• Decree No. 07/2016/ND-CP dated 25 January 2016 detailing the Commercial Law regarding representative offices and branches of foreign traders in Viet Nam;

• Law on Personal Data Protection No. 91/2025/QH15 dated 26 June 2025;

• Labor Code 2019.

II. Scope of Video Monitoring Services

First of all, DB Legal must clarify the nature of the Client’s proposed business activities. Based on your description, the video monitoring center model you intend to implement involves the following core activities:

• Operation and monitoring of clients’ information technology systems, camera systems and security systems under service contracts;

• Image/video analysis, event detection, alerting and reporting in accordance with technical procedures established by the client;

• Continuous 24/7 operation on a shift basis;

• No provision of telecommunications signal transmission services; no ownership or exploitation of telecommunications network infrastructure; and no provision of physical intervention security services.

From a GATS classification perspective, this type of activity is not automatically categorized under a single service group and must be assessed based on its technical nature and actual service scope, in particular:

• Data processing services (CPC 843);

• Other computer services (CPC 849).

For a 24/7 video monitoring center operating by receiving, processing and responding to image/video data transmitted from clients’ systems, such activities may be considered data processing services and related computer services, excluding telecommunications services and excluding security/guard services as defined under Vietnamese law.

Pursuant to Viet Nam’s Schedule of Specific Commitments on Trade in Services under the WTO (GATS), the above-mentioned activities may primarily fall under data processing services (CPC 843) and, in certain cases, may also include other computer services (CPC 849), both belonging to the group of Computer and Related Services (CPC 84).

Under the GATS classification, data processing services (CPC 843) cover activities involving the receipt, processing, analysis, storage and output of data for clients by computer systems, including the processing of image and video data, provided that the service supplier does not own, operate or exploit public telecommunications infrastructure and does not directly provide telecommunications signal transmission services.

Under this model, the enterprise acts solely as an operator of a data processing and technical monitoring center in accordance with the client’s internal procedures. All signal transmission, network connectivity and telecommunications infrastructure are provided by licensed telecommunications enterprises in Viet Nam. Accordingly, the enterprise’s activities are not regarded as telecommunications services under Vietnamese telecommunications law and do not fall within the scope of GATS commitments applicable to infrastructure-based telecommunications services under CPC 843.

III. Market Access under the GATS Commitments and Vietnamese Investment Law

Under Viet Nam’s Schedule of Specific Commitments on Trade in Services under the WTO (GATS), for Computer and Related Services (CPC 84), including data processing services (CPC 843), Viet Nam generally does not impose market access or commercial presence restrictions, except for services involving telecommunications with network infrastructure or services directly linked to the provision of public telecommunications.

The limitations recorded in the GATS Schedule for CPC 843 primarily apply where foreign service suppliers directly provide fixed-line, terrestrial mobile or satellite telecommunications services. In such cases, foreign suppliers must enter into commercial arrangements with telecommunications entities established and licensed in Viet Nam. However, these limitations do not apply to the video monitoring and data processing center model where the enterprise does not provide telecommunications services and merely uses telecommunications services supplied by licensed providers in Viet Nam.

Accordingly, under the GATS Schedule, data processing services (CPC 843) and other computer services (CPC 849) fall within service sectors to which foreign investors are permitted market access in Viet Nam.

With respect to commercial presence, under the commitments, foreign service suppliers were permitted to establish joint ventures (without foreign equity caps) and wholly foreign-owned enterprises to provide computer services in Viet Nam upon Viet Nam’s accession to the WTO. However, during the first two years following accession, wholly foreign-owned enterprises were limited to providing services to foreign-invested enterprises in Viet Nam only. This two-year limitation has now expired, and foreign investors are therefore permitted to establish 100% foreign-owned enterprises and provide services to both Vietnamese and foreign enterprises without restriction. In addition, from 2010, foreign service suppliers have been permitted to establish branches, subject to the condition that the head of the branch must be a resident in Viet Nam.

Pursuant to the Law on Investment 2025 and its implementing regulations, data processing services and related computer services are neither included in the list of prohibited business lines nor in the list of business lines subject to restricted market access for foreign investors. Where a service sector is not expressly specified in international commitments but is not prohibited or restricted under Vietnamese law, foreign investment may still be considered and approved in accordance with the principles set out in the Law on Investment and its guiding decrees.

On this basis, foreign investors may choose to establish a foreign-invested enterprise in Viet Nam to provide video monitoring center services under a data processing model, or to cooperate with Vietnamese enterprises through other appropriate investment structures, depending on their operational strategy and desired level of control.

IV. Registration of Business Lines in Viet Nam for the Video Monitoring Center Model

1. Principles for Determining Business Lines

Under the Law on Investment 2025 and the Law on Enterprises, an enterprise’s business lines are determined based on the actual substance of the service activities provided, rather than solely on the commercial name of the business model. Where a 24/7 video monitoring center receives, processes and analyzes image/video data and issues alerts or reports in accordance with client-defined procedures, but does not provide telecommunications signal transmission services, does not own or exploit telecommunications network infrastructure, and does not engage in physical intervention security activities, such activities are classified as information technology and data processing services.

Accordingly, the registration of business lines should be structured to clearly reflect that the enterprise provides only data processing, operational support and related computer services, in order to avoid regulatory interpretation that could reclassify the activities as telecommunications services or security/guard services, which are conditional sectors and subject to market access restrictions for foreign investors.

2. Proposed Main Business Line

Pursuant to Decision No. 36/2025/QD-TTg promulgating the Vietnam Standard Industrial Classification, the enterprise may register the following business line:

622 – 6220 – 62200: Computer consultancy and computer facilities management

This group includes:

• Consultancy activities relating to hardware, software and computer systems, including cybersecurity consultancy;

• Planning and design of integrated computer systems combining hardware, software and communications technologies, with or without related services such as system installation, training and user support;

• Provision of management and operation services for clients’ computer systems and/or data processing tools; expert activities and other computer-related activities;

• Monitoring, inspection and analysis of network systems and cybersecurity;

• Cybersecurity consultancy and consultancy on software and hardware requirements, and consultancy on the purchase and sale of computer hardware and software components.

• Exclusions:

• Wholesale or retail of computer hardware or software classified under groups 46510 or 47400;

• Installation of mainframe computers and similar systems classified under group 33200;

• Personal computer installation classified under group 62900;

• Software publishing classified under group 582;

• Software installation and computer troubleshooting classified under group 62900.

V. Commercial Presence Requirements and Implementation Options in Viet Nam

1. Establishment of Commercial Presence for a Video Monitoring Center

Under Viet Nam’s Schedule of Specific Commitments on Trade in Services under the WTO (GATS), foreign investors may establish a branch in Viet Nam pursuant to Article 16 of the Commercial Law 2005, subject to satisfying the conditions for branch establishment under Article 8 of Decree No. 07/2016/ND-CP, including:

• The foreign trader is lawfully established and registered under the laws of a country or territory that is a party to an international treaty to which Viet Nam is a member, or is otherwise recognized by the laws of such country or territory;

• The foreign trader has been operating for at least five (05) years from the date of establishment or registration;

• Where the foreign trader’s business registration certificate or equivalent document specifies an operating term, such term must have at least one (01) year remaining as of the application date;

• The branch’s activities must be consistent with Viet Nam’s market opening commitments under international treaties and with the foreign trader’s registered business scope;

• Where the branch’s activities are inconsistent with Viet Nam’s commitments, or where the foreign trader is from a country or territory not party to a relevant international treaty, establishment of the branch requires approval from the competent line ministry.

2. Comparison between Establishing a Legal Entity in Viet Nam and Outsourcing Operations

Outsourcing is understood as a foreign enterprise entering into a service contract with an independent Vietnamese enterprise, under which the Vietnamese enterprise independently organizes personnel, facilities and operations in accordance with agreed standards and outputs, while the foreign enterprise does not directly manage personnel or conduct business operations in Viet Nam. This arrangement does not involve the establishment of a Vietnamese legal entity, branch or representative office, but is essentially a contractual service relationship.

As outsourcing does not create a commercial presence of the foreign investor in Viet Nam, it does not fall within the scope of the Law on Investment and is not regarded as an investment form such as establishment of an economic organization, capital contribution, share acquisition or branch establishment. Under Viet Nam’s GATS commitments, this may be considered cross-border supply of services and is therefore not subject to market access restrictions.

Accordingly, the foreign enterprise is not required to obtain an Investment Registration Certificate, is not required to register business lines in Viet Nam, and is not directly subject to market access conditions applicable to foreign investors. Compliance obligations under investment and business laws primarily apply to the Vietnamese service provider.

From a legal perspective, outsourcing is mainly governed by service contract regimes, including:

• The Civil Code, governing general contractual principles, formation, performance, amendment and termination of service contracts, and liability for breach;

• The Commercial Law, applicable where both parties are traders and the contract is for profit, regulating service provision contracts, payment, penalties and damages;

• Specialized laws depending on the outsourced services, such as laws on information technology, cybersecurity, personal data protection, labor and other relevant regulations.

Although recognized under contract law, outsourcing is only lawful where the foreign enterprise does not directly manage personnel, facilities or day-to-day operations in Viet Nam. If the foreign enterprise exercises substantive control over daily operations, the arrangement may be recharacterized by authorities as commercial presence or disguised investment, triggering investment law compliance and market access requirements.

Conversely, where the foreign enterprise establishes a branch or subsidiary in Viet Nam to directly operate activities (e.g., a 24/7 video monitoring center), the model constitutes Mode 3 – Commercial Presence and is fully subject to Vietnamese foreign investment regulations, including investment procedures (if applicable), market access conditions, WTO commitments, accounting, taxation, labor and operational compliance obligations.

3. Estimated Implementation Time and Costs for Each Option

a. Foreign-Invested Enterprise

This option involves establishing an independent legal entity in Viet Nam, typically a one-member or multi-member limited liability company.

In practice, the timeline is approximately 60–90 days, including procedures for obtaining the Investment Registration Certificate and Enterprise Registration Certificate. For conditional sectors or where consultation with ministries is required, the timeline may be longer.

Costs, beyond relatively low state fees, primarily include legal advisory fees; initial setup costs (office, personnel, technical systems); and ongoing compliance costs (accounting, tax, labor, insurance, reporting). This option has the highest startup costs but offers the greatest legal stability and operational control.

b. Branch of a Foreign Trader in Viet Nam

A branch is not a separate legal entity but constitutes a lawful commercial presence of the foreign trader in Viet Nam, permitted to conduct licensed business activities.

The licensing process typically takes 30–45 days, generally faster than establishing an enterprise as no investment registration procedure is required.

Initial costs are lower than for an enterprise, as no charter capital or complex governance structure is required. However, branches must still maintain accounting, labor and tax compliance similar to enterprises. As branches lack legal personality, all legal liabilities are borne directly by the foreign parent company.

c. Outsourcing to a Vietnamese Enterprise (No Commercial Presence)

Under this option, the foreign company does not establish an enterprise or branch in Viet Nam but contracts with a Vietnamese enterprise to perform all or part of the operations.

This is the fastest option, typically requiring 2–4 weeks, mainly for contract negotiation, execution and operational coordination.

Initial costs are low, with no investment costs and no direct labor, insurance or corporate governance obligations in Viet Nam. Costs consist primarily of periodic service fees payable to the Vietnamese partner. Over the long term, total costs may increase depending on staffing scale and dependency on the partner.

4. Specific Legal Requirements for Operating a Video Monitoring Center

Operation of a video monitoring center in Viet Nam is subject to multiple categories of specific legal obligations, primarily relating to personal data protection, cybersecurity, labor organization and physical security and safety, as follows:

a. Personal Data Protection and Privacy

Video monitoring inherently involves personal data processing, as images and videos capable of identifying individuals constitute personal data under the Law on Personal Data Protection 2025.

Accordingly, the video monitoring center must comply with obligations including:

• Having a lawful basis for data processing, particularly valid consent from data subjects or other legal grounds;

• Conducting a Data Protection Impact Assessment (DPIA) where monitoring is regular, large-scale or poses privacy risks;

• Establishing internal data protection procedures, including access control, access logging and data breach handling;

• Where video data is transferred overseas (e.g., accessed or stored at a Dutch headquarters), complying with cross-border data transfer requirements under the Law and implementing regulations.

b. Cybersecurity and Information System Safety

Under the Cybersecurity Law 2018 and related regulations, a video monitoring center is considered an entity that:

• Operates information systems processing data;

• May be involved in information security and cybersecurity, particularly with continuous 24/7 connectivity.

• Legal obligations include:

• Implementing measures to ensure information system security and prevent unauthorized access and cyberattacks;

• Storing and managing system logs as required;

• Cooperating with competent authorities upon lawful requests for investigation or national security purposes.

c. Labor Organization, Shift Work and Night Work

Due to 24/7 operations, video monitoring centers must strictly comply with the Labor Code 2019, particularly regarding:

• Working hours and rest periods;

• Shift work and night work;

• Overtime limits and payment of overtime and night work premiums;

• Labor contracts, social insurance and occupational safety and hygiene.

These obligations apply regardless of whether the operator is a Vietnamese legal entity or a branch of a foreign trader.

d. Physical Security and Safety at the Operational Site

Current law does not mandate dedicated security guards for video monitoring centers. However, enterprises must:

• Ensure safety of assets, data and employees;

• Implement access control measures, equipment management and workplace zoning;

• Comply with fire prevention and firefighting regulations and electrical safety requirements, particularly for continuous operations.

Locating offices in buildings with access control systems, especially on higher floors, is generally considered consistent with compliance best practices.

5. Physical Security Arrangements at the Office

In principle, Vietnamese law does not require video monitoring center operators to deploy dedicated in-house security personnel, except where premises fall under special security or defense categories or involve assets or data subject to specific legal controls.

Under general safety, security and fire prevention regulations, enterprises are responsible for ensuring safety of employees, assets and information systems, without being mandated to adopt any specific measure such as hiring security guards.

VI. Initial Operating and Personnel Cost Estimates

Based on advisory experience and prevailing market conditions in Da Nang for 24/7 office operations (including monitoring centers, NOCs, SOCs and technical support centers), the following preliminary estimates are provided for reference only and may vary depending on scale, suppliers and system availability requirements.

1. Technical Infrastructure – Telecommunications – Backup Power

a. Internet Connectivity

For continuous video monitoring, dedicated leased-line Internet connections are standard practice.

• International symmetric leased line 1 Gbps: approximately VND 35–60 million/month, depending on provider and SLA commitments;

• Redundant solution (two independent connections from different providers): total approximately VND 65–100 million/month.

• b. Backup Power

• For small to medium offices (10–30 staff):

• Industrial online UPS (10–20 kVA): initial investment approximately VND 120–300 million;

• Generator: typically provided by Grade B or higher office buildings; otherwise, private investment approximately VND 300–700 million.

Monthly operating and maintenance costs are generally minimal relative to total operating costs.

2. Office Setup and Equipment

Typical initial setup costs per monitoring workstation include:

• Computers and processing equipment: VND 18–30 million;

• Monitors (2–3 units): VND 8–15 million;

• Ergonomic desks and chairs: VND 6–12 million;

• Network equipment (allocated): VND 3–6 million.

Total estimated setup cost is VND 35–60 million per staff member, excluding rent and fit-out.

VII. Personnel Costs and Labor Law Requirements

1. Monthly Personnel Costs (Estimated)

In Da Nang, personnel costs are generally lower than in Ho Chi Minh City:

• Shift-based monitoring staff: VND 10–14 million/person/month;

• Shift or operations managers: VND 18–25 million/month;

• Mid-level IT/Network staff: VND 22–35 million/month.

These figures include employer contributions to social insurance, health insurance, unemployment insurance and trade union fees.

2. Labor Law Requirements for 24/7 Operations

Under the Labor Code and guiding regulations:

• Labor contracts must be in writing;

• Maximum probation period is 60 days for professional positions;

• Standard working hours: 8 hours/day, 48 hours/week;

• Overtime must comply with statutory limits;

• Night work (22:00–06:00) requires at least a 30% wage premium;

• Weekly rest days, public holidays and annual leave apply, including for shift workers.

24/7 operations are legally permitted provided that shifts are properly organized and wage, allowance and rest obligations are fully complied with.

VIII. Environmental Risks and Business Continuity

1. Political and Legal Environment

Viet Nam is generally regarded as a stable environment for foreign-invested service and operations businesses. The legal framework for investment, labor and taxation is relatively stable and changes are typically introduced on a planned basis.

Legal risks primarily arise from compliance obligations, particularly in personal data protection and information security, rather than political factors.

2. Weather Conditions in Da Nang

Da Nang experiences its storm and rainy season mainly toward year-end; however:

• Direct storm impacts are generally limited;

• Flooding is usually localized and short-term;

• Power and telecommunications infrastructure in central areas recovers quickly.

For offices located in high-rise buildings with backup power and Internet, operational disruption risks are considered manageable.

This constitutes DB Legal’s advisory opinion. Should you require a detailed fee quotation or further clarification, please do not hesitate to contact us for timely assistance.

Law on Personal Data Protection see here for more details

 

The information contained in this article is general and intended only to provide information on legal regulations. DB Legal will not be responsible for any use or application of this information for any business purpose. For in-depth advice on specific cases, please contact us.

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